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July 24, 2013

States’ LTC Squeeze: Demand Swamping Services

A report co-authored by AARP found that more than 60% of states had seen an increase in demand but no increase in spending

States are struggling to meet requirements for long-term care and support services for elderly and disabled adults, even as more states are increasing participation in home- and community-based health services (HCBS), according to a report released in July.

The report was issued jointly by AARP Public Policy Institute, the National Association of States United for Aging and Disabilities and Health Management Associates. Furthermore, demand is growing for non-Medicaid services even though many states are maintaining current funding levels or reducing them.

The report identified a disturbing trend among the long-term services in demand. Between 2010 and 2012, more than 60% of responding states have seen an increase in demand for adult protective services. However, expenditures on these services remain largely unchanged, and some states reported a decrease.

Furthermore, according to AARP, there’s no current source of federal funding to support APS programs. Passed in 2010 as part of the Affordable Care Act, the Elder Justice Act authorizes federal funding for APS programs, but Congress has yet to act. “Due to their heavy reliance on state funds, APS programs exhibit particular sensitivity to economic downturns and declines in state revenues,” the report noted.

The report, “At the Crossroads,” was conducted last fall among state aging and disability agencies and Medicaid agencies. The report includes responses from 48 Medicaid agencies, including Washington, D.C. (North Carolina, South Dakota and Wisconsin did not participate), and 48 aging and disability agencies (Florida, West Virginia and Wisconsin did not participate).

Although some state’s fiscal conditions have improved since 2007, the study found recovery was “inconsistent.” Most states said they expect their 2013 tax revenue to exceed their pre-recession level, but 16 states expect revenues will remain below their pre-recession level.

“The recession affected states at different times, and to different degrees,” according to the report. “The impact of the economic decline in any single state would be cumulative over time and would depend not only on the magnitude of revenue decline from pre-recession levels, but also on the length of time the state experienced such a decline.”

Medicaid is the largest funder of long-term aging and disability services, the report found, with a combined state and federal total of $131 billion in 2011. While 7% of Medicaid recipients are receiving benefits for long-term care services, they account for 30% of expenditures.

“It’s increasingly evident that we need to rethink how we address long-term services and supports in this country,” Susan Reinhard, senior vice president for the AARP Public Policy Institute, said in a statement. “Long-term services and supports are critical not only to the population they serve, but also to the family caregivers who support them.”

The report found 24% of state agencies reported an increase in the non-Medicaid portion of their budgets between 2011 and 2012. Almost half reported no change and 30% reported a decrease. For 2013, most agencies expected the same level of expenditures.

Resource centers and home-delivered meals were common targets for increased expenditures, and were the most in-demand services reported by states that participated in the survey. Information and referrals, support for caregivers, and transportation services were also in high demand.

The most frequently used strategy to reduce costs was to streamline operations or form new partnerships rather than cut services. Just two states reported they eliminated programs or programs in 2012, and none reported they would make such a move in 2013.

Resources for HCBS waiver recipients are expected to increase and the nursing home population is expected to decrease or stay the same, the report found. Eighty percent of states that responded said there are more waiver recipients or will be over 2012 and 2013. Consequently, expenditures have increased as well. Over half of the states that said they increased waiver expenditures did so by 5% or more, and 21 states expect to do the same in 2013. Five states said they would increase expenditures by 15% or more.

One initiative many states are undertaking is to improve coordination between people who are eligible for both Medicaid and Medicare. Over 10 million people are dually eligible, the report found, and two-thirds of responding states said they’re launching new initiatives over the next two years. The most common initiative is a risk-based managed care financial structure.

“The decision by so many states to transform their Medicaid LTSS systems from fee-for-service to managed care ranks as the most significant byproduct of The Great Recession,” Martha Roherty, executive director of NASUAD, said in the statement. “But our report documents that other vital programs for seniors, reliant entirely on state revenues, still languish six years after the recession began. As their economies improve, states now must turn their attention to other state programs like Adult Protective Services, still struggling with reduced or flat funding, hiring freezes and staff reductions.”

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